Highlights of the 2023/24 Federal Budget: Key Takeaways

The Australian government's annual Federal Budget holds immense importance for the nation's economic direction, shaping policies and priorities for the upcoming financial year. As we delve into 2023, Australia finds itself at a critical juncture, recovering from the effects of the global pandemic and aiming to build a resilient future. The recently announced 2023/24 Federal Budget reflects the government's commitment to economic recovery, social welfare, and long-term sustainability.

Together let’s explore the key highlights of the budget, its impact on various sectors, and the vision it sets forth for Australia's future.

Small Businesses:

• From 1 July 2023 to 30 June 2024, temporarily increasing the instant asset write-off threshold to $20,000, allowing small businesses to deduct the eligible assets. Assets valued above $20,000 can be depreciated.
• Sunsetting the eligibility of plug-in hybrid electric cars for the FBT exemption, effective from 1 April 2025.
• Introducing the Small Business Energy Incentive, allowing small and medium businesses to deduct an additional 20% of eligible depreciating assets that support electrification and energy efficiency with a maximum bonus deduction of $20,000. Eligibility criteria will be released once it has been finalised.
• Amend tax laws by reducing the GDP adjustment factor for pay-as-you-go (PAYG) and Goods and Services Tax (GST) instalments from 12% to 6% for the 2024 income year.
• Providing a lodgement penalty amnesty program for tax statements lodged from 1 June 2023 to 31 December 2023 for statements that were originally due from 1 December 2019 to 28 February 2022.

Individual tax:

• Increasing the Medicare levy low-income thresholds for singles, families, seniors, and pensioners to provide cost-of-living relief.
• Exempting eligible lump sum payments in arrears from the Medicare levy to ensure low-income taxpayers are not burdened by higher amounts.

Superannuation:

• Increasing the frequency of superannuation guarantee payments to align with salary and wages payment from 1 July 2026. Superannuation guarantee payments will be paid on the same day as salary and wages.
• Reduce the tax benefits for individuals who have a total superannuation balance exceeding $3 million starting from July 1, 2025. Earnings above that threshold will face an additional 15% tax rate. Earnings relating to assets below the $3 million threshold will continue to be taxed at 15% or 0% if held in a retirement pension account.

Other budget measures:

Extending the measure to provide age and veteran pensioners with a once-off credit and increased income bank to incentivise pensioners to enter the workforce. Pensioners can earn up to $11,800 before their pension is reduced.

This blog has been prepared for the purposes of general information and guidance only. It should not be used for specific advice or used for formulating decisions under any circumstances. If you would like specific advice about your own personal circumstances, please feel free to contact us on 02 9411 5422. We can help make sure the right method is used to give you the maximum possible tax deduction associated with any of these methods.